Bergen, Passaic home sales cool off as prices rise

A house for sale on Schlosser Drive in Rochelle Park. Prices are up and mortgage standards still strict.

North Jersey, like the rest of the country, has yet to fully recover from the effects of the economic downturn.

The number of single-family homes sold in Bergen and Passaic counties is running about 10 percent below last year's rate — a sign that the real estate market still has a way to go before it fully recovers from the worst downturn since World War II.

At the same time, prices for single-family homes have risen this year, according to the New Jersey Association of Realtors. Through July, median prices for single-family homes are up 3.4 percent in Bergen and 1.7 percent in Passaic over the same period last year, NJAR says.

The slower pace of sales in North Jersey reflects a similar trend nationwide. U.S. existing home sales in July were 4.3 percent below last year's rate.

Mortgage rates are still in the 4 percent range, which might be expected to boost home sales. But the pace of sales has slackened for a number of reasons, including this year's harsh winter weather, flat incomes, tight mortgage standards, lower inventory and rising home values, which have priced many would-be buyers out of the market.

"Median family incomes are still lagging behind price gains," Lawrence Yun, chief economist for the National Association of Realtors, said recently. He warned that homes are likely to become less affordable in the years ahead, since the Federal Reserve has signaled that interest rates will rise in 2015.

Through July, there were 3,964 closed sales in Bergen County and 1,820 closed sales in Passaic, both down about 10 percent from the first seven months of 2013.

The year got off to a slow start with snowstorms that kept sellers and buyers out of the market. "Sellers didn't want to put their houses on the market with 4 feet of snow around them," said Dawn Cox, a Weichert agent in Wayne.

"Our spring market was very short," agreed Robert Abbott of Abbott & Caserta Realtors in Ho-Ho-Kus.

But sales stayed lower than last year's rate after the snow melted. Marilyn Nuber of Keller Williams in Ridgewood said that the sales pace has fallen from 2013 in part because sales were so strong last year, posting the highest number since 2006. "A lot of that pent-up demand was satisfied last year," Nuber said.

She also pointed out that many younger households are unemployed or underemployed, and "not making enough to buy their first houses."

In the wake of the recession, many people "don't have the credit scores to get access to the lowest interest rates, and they have difficulty amassing a down payment," said Keith Gumbinger, vice president at the Riverdale-based mortgage information firm HSH.com.

In addition, Gumbinger said, many people have soured on the idea of homeownership after the housing bust, when they saw family and friends lose homes to foreclosure or get stuck with homes worth less than the mortgage amount.

Another reason buyers haven't been purchasing homes: There's not a lot of inventory out there. Homeowners are reluctant to list their homes, in many cases because they still owe more on their mortgages than the properties are worth.

Home inventories in July were down about 6 percent in Bergen County compared with a year earlier, at about 4,500 homes, and about 3 percent in Passaic County, at about 3,050 homes.

"Unsold inventory remains low, limiting choices for home buyers," said Jeffrey Otteau, an East Brunswick appraiser who tracks the state housing market.

"There appears to be a conservatism among consumers and their willingness to take on big-ticket purchases, such as homes," Fannie Mae economist Douglas Duncan said recently. "We currently estimate that 2014 will finish lower in total sales figures than 2013 — and that 2015, while stronger than 2013 and 2014, will not be the breakout year some are expecting."